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Friday, November 16, 2012

BP plc (NYSE:BP) may be liable to pay more in fines for oil spill

On Thursday BP plc (ADR)(NYSE:BP) announced a
settlement of $4.5 billion against federal criminal charges brought against it
for the Deepwater Horizon disaster in 2010 that killed 11 workers and also led
to the largest spill in the history of the United States.

It is being touted as the largest settlement ever
made. This is however not all - the company has so far provided for $42 billion
in fines that it expects to pay as a result of the oil spill.

The company has been meeting the costs associated with
the incident through asset sales and now it is a much smaller company than what
it was, though still profitable in the oil industry.

Analysts said that the crucial period was not yet past
for the company but that the company had moved a step closer to moving beyond
the danger zone.

There is a trial coming up in February in New Orleans
to fix BP's civil liability in the whole issue and that is critical for the
company's future.

If the court does find that the oil spill and the
subsequent damage that was caused occurred due to BP's negligence then the
company will be liable to pay even more in fines than previously estimated.

For instance, BP has reserved $3.51 billion for
possible civil fines under the Clean Water Act. The act allows up to $17.6
billion in civil fines — maybe $21 billion depending on definitions of how much
oil actually spilled into the Gulf — said Environmental Law Institute attorneys
Jordan Diamond and Jay Austin.